IP: Hop, skip and jump those ads

On Sept. 18, 2013, a New York federal judge denied ABC Inc.’s attempt to block pay-TV provider Dish Network Corp. from providing its Hopper DVR advertisement-skipping digital video recording service to viewers. The judge refused to do so almost two months to the day after the 9th Circuit rejected a similar request by Fox Broadcasting Co. to stop Dish’s service.

Dish unveiled its DVR set-top box last year with two features: PrimeTime Anytime, which allows viewers to record a block of prime-time television; and AutoHop, which allows viewers to skip advertisements during their viewing of PrimeTime Anytime.

ABC, CBS, NBC and Fox have been waging a full-out war against Dish because the broadcast networks want to stop Dish subscribers from using the PrimeTime Anytime and AutoHop features on the Hopper DVR to skip advertisements.

The broadcast networks, which are trying to break separate contracts with Dish, claim the ad-skipping service breaches their retransmission consent agreement with Dish, infringes on their copyrights, unfairly competes with the authorized on-demand and commercial-free options currently offered by the broadcast networks and their licensees, and—perhaps most importantly—will kill their entire model of doing business, i.e., offering free programming in exchange for viewers having to watch commercials.

In its defense, Dish relied in part on a 1984 U.S. Supreme Court ruling that consumers have the right to make copies of television shows with video recorders for later viewing—a decision dating to the innocent lost days of the Sony Betamax videocassette player. Remember those?

Dish also relied on a 2008 decision by the U.S. Court of Appeals in New York that a company is not liable for copyright infringement if its customers initiate the recording process. “The Hopper is nothing but a souped-up DVR,” Dish said in its written arguments opposing an injunction. “Consumers are making the copies, not Dish.”

Despite Dish’s arguments to the contrary, in November, a California federal judge agreed with Fox that Dish essentially pirates copies of Fox programs in order to provide PrimeTime Anytime, and that the network could be harmed by AutoHop's ad-skipping technology. That same judge, however, denied Fox's motion for a preliminary injunction against the service. The Fox-Dish contract specifically forbids ad-skipping features, but only on video-on-demand technology, not on network prime-time programming.

On appeal, the 9th Circuit recently ruled that Dish’s technology likely does not infringe Fox’s copyrights in its programs and should remain available to Dish’s viewers pending a full trial on the merits.

At the same time, CBS has been trying to break a contract with Dish, arguing that it would never have entered into the agreement if it had known that Dish planned introduce the ad-skipping features.

In response to ABC's request for a preliminary injunction, Dish argued that it pays fees to networks to retransmit the network's broadcasts.

It is safe to assume that Dish's battle with ABC will only further escalate at the end of September, when Dish’s carriage deal with Disney/ABC TV Group expires. It is not far-fetched to assume that Disney will use the Hopper as a point of contention during negotiations.

On the heels of these disputes, the next logical questions to ask are what is to become of network television? And, will it look anything like what we are used to today?

Dish argues that its intentions are badly misunderstood—and that no matter what type of DVR a viewer has, he or she can use it to skip commercials. That fact cannot be ignored. Instead, Dish is going to the broadcast networks and saying, "Do not ignore that fact. Instead, accept it and look for ways to make even more money from advertising."

Dish’s suggestion? Targeted advertising. Dish argues that if broadcasters were to work with Dish to develop smarter targeting solutions, the ensuing advertising model would work for all parties concerned—consumers, content owners and distributors. One way or the other, Dish argues, the current advertising model is going to change, with or without the Hopper.

In the meantime, the big four broadcast networks remain hopping mad. They're resolutely opposed to Dish’s ad-skipping technology—and, unsurprisingly, they refuse to air on their own networks any paid commercials from Dish Networks that promote the service. This battle is far from over, but if Dish has its way, ad-wary consumers may be skipping for joy. Until the networks decide they can recoup lost advertising revenues by charging more for content.

Contributing Author

Scott Slavick

Scott Slavick is a shareholder at Brinks Gilson & Lione, where his practice focuses primarily on trademark prosecution and trademark litigation. Scott maintains all aspects...